DEVT10001 Lecture Notes - Lecture 7: General Agreement On Tariffs And Trade, Invisible Hand, Uruguay Round
28 Jul 2018
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Document Summary
Potentially far more valuable than aid or debt reduction. Asian countries that have got richer in the last 50 years have done so by increasing production and trade (exports) Countries cut off from trade have low/stagnant rates of econ growth. Trade is necessary to distribute the world"s resources at the lowest possible price (comparative advantage theory): trade theory. Adam smith (1700s): classical theory underpinning the economy (roughly round the same time as marx) trying to understand what capitalism is. He focused on the ideal relationship bet people in the marketplace - the seller wants to sell their goods for the highest possible price but the buyer of said goods wants to buy it for the cheapest possible price. This establishes a system of supply and demand (the invisible hand of the market). Countries should specialise in what they do best and trade the rest. David ricardo: takes smith"s theory of absolute advantage and changes it into comparative advantage.
